Value of Adapting to Sea Level Rise
Attributes
Medium: Water
Country: Vietnam
Analytical Framework(s): Economic Analysis
Study Date: 2009
Publication Date: 2011
Major Result(s)
| Resource/Environmental Good | VND, million currency units (2009) |
VND, million currency units (2014)1 |
USD, million currency units (2014)2 |
|---|---|---|---|
| Expected net present value of building a small-scale dike appropriate for a storm that occurs once every 20 years3 | 281,959,000.00 | 396,676,838.74 | 18,568.58 |
| Expected net present value of building a medium-scale dike appropriate for a storm that occurs once every 50 years | 325,153,000.00 | 457,444,749.58 | 21,413.15 |
| Expected net present value of building a large-scale dike appropriate for a storm that occurs once every 100 years | 359,229,000.00 | 505,384,910.94 | 23,657.24 |
About the Inflation Adjustment: Prices in Vietnam (VND) changed by 40.69% from 2009 to 2014 (aggregated from annual CPI data), so the study values were multiplied by 1.41 to express them in 2014 prices. The study values could be expressed in any desired year (for example, to 2026) by following the same inflation calculation and being sensitive to directional (forward/backward) aggregations using your own CPI/inflation data.
Study Note: Vietnam is one of five countries in the world most likely to be seriously affected by the impact of global climate change and any consequent rises in sea level (SLR). The boundaries of the Vietnamese Mekong Delta (VMD) are marked by the sea and so this area faces a risk of SLR due to global climate change. The necessity of investing in creating a concrete sea dike system in the VMD is still the subject of debate.
Study Details
Summary: The purpose of this study is to conduct an economic valuation of creating a concrete sea dike system as an adaptation measure to counter the impacts of a rise in sea level. A risk cost-benefit analysis (CBA) framework was used. It uses an ex-ante approach with risk considerations for storms, floods, and salinity by specifying probability distribution functions in a simulation process, in order to incorporate these risk factors into the analysis. The study developed five dike options associated with three hypotheses of the scale of different sea dike systems: option 1 represented a dike that could withstand the severity of a storm that occurs once every 20 years, option 2 and option 3 represented a dike that could withstand the severity of a storm that occurs once every 50 years, and option 4 and option 5 represented a dike that could withstand the severity of a storm that occurs once every hundred years. The results showed that the benefits of storms and floods avoided dominated the dike options. The benefit of salinity avoided was also valuable, with annual rice and aquaculture productivity losses avoided of USD 331.25 per ha and USD 915 per ha, respectively. Based on the NPV decision rule, the results indicated that dike options should be recommended as an appropriate adaptation measure for the VMD's particular geographic situation. The larger in scale the dike system optionswere, the higher the ENPVs were. Of the dike alternatives applicable to the VMD, initially small-scale dikes that can be subsequently heightened should be a priority choice if the impacts of a SLR focus mainly on storms, floods, and salinity factors. The sensitivity analyses showed that the ENPVs of dike options were very sensitive with changes in discount rate but were not sensitive with increases in salinized areas at all.
Site Characteristics: This study was conducted in Tra Vinh province, which borders the South East Asia Sea and so represents an area of the VMD that would be typically affected by an increase in SLR.
Comments: The findings provide evidence to support the necessity of the construction of a concrete sea dike system in the Vietnamese Mekong Delta, given the context of global climate change.